Dave Payerchin Shares How He and His Partner RJ Pepino Bring in 6 Figures per Month Through 100+ Rental Properties

Steve Trang: Hey, everybody. Thank you for joining us for today's episode of Real Estate Disruptors. Today, we have Dave Perchian with Cellhouse Columbus. He flew in from Columbus, Ohio to talk about how he and RJ's company brings in 6 figures a month in rent. If this is your first time tuning in, I am Steve Trang, founder of the OfferFastHomes app, the only MLS for off market wholesale properties, and I'm on a mission to create 100 millionaires.

One question I do get a lot is how do I become one of the 100 millionaires? So please allow me to answer it here. The information on this podcast alone is enough to help you become a millionaire in in the next five to seven years. Take consistent action, and you will become one. When you hear a nugget, please just type it to the comment section.

And after the show, identify your single biggest takeaway and just focus on that for the next seven days. If you get value today, please tag a friend below or share this episode right now. That way we can all grow together. And this is a live show, so please ask your questions for Dave to answer. You ready?

Let's go. Alright. So first question is

Dave Payerchin: Yeah.

Steve: What got you into real estate?

Dave: What got me into real estate so, just a a bit about my background. It's actually very nostalgic, Steve, to be out here. In fact, yesterday, my much better half and I were driving all around Phoenix because I come from Cleveland. I was born and raised in Cleveland. But I actually right after high school, I packed up and moved out here to do construction.

So I packed up a tool belt, a drill, and a suitcase full of

Dave: clothes, and I literally thought I was gonna do construction out here in Arizona. And What year was this?

Dave: 2001. Arizona. And What year was this? 2001.

Steve: Okay. Alright. So that was well before the boom.

Dave: But it was just getting started. So being a kid from Cleveland, I'd never seen, you know, just a field of Del Webb communities being constructed.

Dave: Mhmm.

Dave: It was insane. Right? So I had a little miracle in my life happened here in Arizona, and, I don't share this very often. But I didn't have a car, so I was rollerblading everywhere. Pair of rollerblades, and I went to 24th Street in Camelback, you know, the Biltmore.

Mhmm. How long have you been out here, Steve?

Steve: I grew up here. I came here when I was a baby.

Dave: Okay. So you remember, you know, the Biltmore?

Steve: Of course.

Dave: Do you remember the old coffee plantation that used to be there? It's something else now. Anyway

Steve: I remember Tower Plaza.

Dave: I was rollerblading through here and I hear someone yell, Dave. So you know how it is. Every time you hear your name

Dave: Mhmm.

Dave: Boom. You know, who who was that? And I'm like, wait a second. I don't know anyone out here. I look behind me.

It was a girl that I sat next to in a keyboarding class who was an exchange student from Arizona. Right? What are the odds? In the first three months of me living here, and she's like, what are you doing here? And I'm like, I just moved here.

I'm doing construction, and I'm looking for a second job. I wanna make money. I've always been money motivated. Mhmm. Right?

I've always been a collector or portfolio builder, if you will. I got a big sports card collection from when I was a kid. But I said, yeah. I'm looking to make extra money. And she said, why don't you go to MCI WorldCom at 18th Street in Camelback and they'll hire anyone.

It was I was a phone telemarketer, and I started the telemarketing gig. This was back in o one. And, basically, soon, the telemarketing took over my construction revenue. So I went full time into sales in o one, and, I wasn't even old enough to drink, Steve. So I would literally, just hang out at Borders Bookstore right there at the Biltmore.

No longer in business, but I would just liter I had no friends, wasn't old enough to drink, so I would go to bookstores and read books on sales. And if you've ever been to a bookstore, which I know you have, right next to Emery's sales section So being a kid from Cleveland with no money, you see a book, How to Retire Young and Retire Rich with Real Estate. I dove into the real estate. So I think like a lot of people, I got into real estate for the freedom, for the money lifestyle. Right?

Especially as a 19 yeah. I started studying real estate when I was 19, 20 years old. But I think anyone who says the money is not some reason why they started in real estate is is pulling your leg a little bit.

Steve: They're lying to themselves.

Dave: For sure.

Steve: Or to you. Yeah. Who wrote that book?

Dave: Kiyosaki. It was a Kiyosaki. One of those

Steve: was a Kiyosaki?

Dave: It was it was I think it was, like, from Sharon Lechter, like, one of his proteges or power team people. Yeah. But that was really what got me started on the journey.

Steve: Got it. Okay. So you're 19. It's early two thousands. Yes.

So you get the book, then what?

Dave: I just dove into Tony Robbins. I dove into Kiyosaki books, and I just worked it. So I just continued to work, in telemarketing because it's not like I just read a book and packed up and I'm full time into real estate.

Dave: Yeah. So

Dave: I was living there. I didn't start in real estate till o five. So it was four years of telemarketing. Wow. And four years of just studying.

I bought a Carlton Sheetz course, but I witnessed something at a young age that totally changed my perspective. So do you even remember the company, MCI WorldCom?

Steve: I remember they're one of those companies that the the accounting was highly suspect.

Dave: For sure. Yeah. The CEO, Bernie Ebbers, he's probably I think he passed away. In fact, I researched it recently.

Steve: I think he went they they they arrested him and then he got super sick right after they arrested him.

Dave: Isn't that isn't that funny how these energetic things work sometimes Yeah. Too? Yeah. That was right around the Enron scandal. All sorts of people were poking

Steve: me bugs. Yeah.

Dave: I walked into work one day at MCI, and I had no financial literacy at this point in my life. Mhmm. So I walk in one day, you know, my little brown bag of lunch and getting ready to make some sales. And, they're like, oh, wait. We're closing.

We're we're out of business. So I witnessed people in tears, people who worked there for twenty years. Their four zero one k got obliterated.

Steve: Yeah. They got decimated. Decimated.

Dave: So I that just further reinforced. I'm like, okay. Look. I cannot rely on a corporation, to create freedom for myself. Everything I was reading in the books, it's like now I'm witnessing in my

Steve: Yeah. It's kinda interesting because, I think for a lot of people, it's kinda hard to take the idea of a corporate world is actually not safe. It feels safe, but it's not safe at all.

Dave: Correct.

Steve: And I was lucky working at Intel Sure. To watch all these people get laid off all the time. Yes. So it was, like, actually a blessing Yeah. To be hanging to be at a company where people are getting laid off because then we can pierce that false sense of stability.

Dave: Yeah, man. So that's how I got started. I I got to witness all this. And I was a kid from Cleveland, so I had a big ego. Like, I had a lot to prove.

Mhmm. I'm the baby of my family. I'm the youngest of four children. Having older brothers and sisters, moving out at such a young age, it's like, I'm gonna show everybody. Not to mention in high school, I never got good grades.

I was voted class clown for the high school graduating class.

Steve: So Was that was that, like, a good thing or a bad thing?

Dave: I mean, it is what it is. Right? But I just never no one never no one ever really had a high expectations for me.

Steve: Got it.

Dave: I'll I'll put it that way. And so I had a chip on my shoulder when I entered the business and, you know, and and in our business, you've been doing this a long time. You've also met and interviewed A lot of ego comes with this. It's like, finally, I found something that I can create a small amount of success with. I'm gonna prove to everybody.

So I started off on the wrong foot, but I think a lot of people start in business or anything that way. It's that competitive attitude.

Dave: Mhmm.

Dave: But that's why I started, and I did the telemarketing for four years here in Arizona. And then one day, it was May 2005, I had $14,000 saved up, and I put it all into direct mail campaigns. And I was full time into real estate.

Steve: So all.

Dave: I just went for it. Yeah. I mean,

Steve: I was just You just bet it all in black.

Dave: I would for sure. No. I yeah. I was handwriting envelopes, and, I bought a list. I think I got a list from a title company, Camelback Title.

They're probably not even in business anymore.

Steve: I haven't heard of their name in a long time.

Dave: Doesn't matter. Yeah. But that's what I did. I got a list, and I started stuffing envelopes and writing out handwritten envelopes. And I got my first two deals off of Fillmore, off of Van Buren.

Dave: Mhmm.

Dave: You familiar with that area?

Steve: Of course. I'm familiar with Van Buren. They're up here.

Dave: Well, that area has come up a lot. So the hookers actually have teeth now on on Van Buren. I've noticed since they put the light rail in, the the bar has been raised. But I got, I got my first two deals. I just remember being nervous as hell, and then it was off to the races.

But the year was two thousand five. What was going on in the real estate market in o five?

Steve: It was a crazy run up.

Dave: Crazy run up. Why?

Steve: I I'm convinced it's because of Rich Dad Poor Dad.

Dave: Well, no. A lot of that's probably has to do with a lot of it. In fact, my business partner, RJ Papino, that's how he got his start was Keith Saki. So lots to be said about that. Guy changed a lot of people's lives, but Yeah.

It was because they were giving money away so loosely. That was really the catalyst that drove

Steve: Ninja loans.

Dave: Ninja loans. So everybody and their brother was buying houses.

Dave: Mhmm.

Dave: So, So therefore, me as a wholesaler, I was driving for dollars, and I would track down the owner. And I was I made a $180,000 in my first fiscal twelve months of doing real estate full time.

Steve: Wow.

Dave: And I was 23 at the time, 23, 24.

Dave: Felt a

Steve: little invincible.

Dave: Felt a a lot invincible. And you give, you know, that amount of money to somebody who has zero financial literacy.

Dave: Mhmm.

Dave: It's like pulling the pin out of a hand grenade and handing it to them. Yeah. So I bought, no. What is it? A Mustang.

I got an an Audi. I drove by my old house. They leveled the old house, actually. It was off Piccadilly Road in 49th Street. I can see Camelback Mountain.

Mhmm. I had no business owning these homes. Countrywide mortgages. I was walking into Washington Mutual pulling out third mortgages against houses. It was a nightmare.

And the biggest lesson that came from that is debt is not income. Mhmm. Right? These are loans that need to be paid back. So needless to say, in o seven, I was completely belly up.

I went bankrupt. And then I started waiting tables at 44th Street and Thomas, Applebee's.

Steve: So before we get into that Sure. I think going back to what I was saying earlier about Rich Dad Poor Dad Yeah. He did push very much that there is good debt and bad debt. And and and This is true. And that's why I kinda said, like, people were overleveraged because that book taught them to be overleveraged.

Yeah. But what I wanna ask you is

Dave: Sure.

Steve: Your eyes were opened in 2001, and then you didn't really do anything until until you got basically stomach punched, right, by MCI. Yeah. So and the reason why I wanna bring this up because there's a lot of people, and you see this. Sure. Like, they're watching YouTube.

They're reading the books. They're listening to the podcast, and they just don't have that in them to just take that first step. Yeah. So do you wanna talk about that at all?

Dave: Sure. Yeah. I mean, if I could do it all over again

Dave: Mhmm.

Dave: I would have absolutely not tried to been a lone ranger and just that's that ego, right, in trying to do everything myself. So when I first started out, I left MCI and then I continued my telemarketing career at a different company, not even in business anymore. It was okay. Let's call it what it is. Boiler rooms.

I was born in the boiler room.

Steve: I also cut my teeth in the boiler room.

Dave: Okay. Well, we're we're of the same kin here then.

Steve: Yeah.

Dave: But I continued my telemarketing, and I tried to do everything myself. So I started going to RIA meetings. I would, cut out of work early just to go to a RIA meeting, and I thought everyone was my competition. Right? And I having a mentor, I don't want a mentor.

I'm gonna figure it all out myself. It's

Steve: not worth paying them.

Dave: It's not worth paying them. I'm not gonna I'm gonna do this all myself. I'm not I I wouldn't share with anyone. Mhmm. I didn't play nice in the sandbox in the early years, and that is that's actually the number one thing that inhibited my growth.

Didn't contribute to it.

Steve: Yeah. So any words of advice as far as taking action Yeah. To people listening.

Dave: Okay. Start where you're at. So, you know, if you were just getting started and you're on a shoestring budget, call it for what it is. Just be authentic about where you're at.

Dave: Mhmm.

Dave: Maximize the resources that are are right under your nose. Right? A lot of times people think they have to reach for something new in the next best course and this and that. Most people watching this podcast, you probably could get enough value just from this podcast, which is free, to take some type of action. And even a small action, is action and do something every day.

I know it sounds so cliche. Right?

Steve: It's very cliche, but it's not wrong.

Dave: I would tell you this. So if I was just getting started and I can talk to my 21 year old self or however old I was, and, 23 is actually when I started. But I would say, look. Find a mentor and add as much value to somebody who aligns in your core values and has or is doing what you want to do. But the core values thing is big because if you don't see eye to eye and don't gravitate and and, if you're not in the same frequency with somebody, it's not gonna be a fit.

But find somebody who does what you want or has what you want and figure out how you can add as much free value to that person as you possibly can. Work for free when you're first getting started.

Steve: Yep. Absolutely. Okay. So you had this meteoric rise, just destroyed it coming out of the gate. Yeah.

Yeah. And then you get humbled. Oh, yeah. Reality has a way of humbling you.

Dave: Brother, I'm the youngest person you've ever met. I guarantee I'm the youngest person you've ever had on the show who had a IRS deposition sitting there with a recorded two IRS agents. I didn't know you had to pay taxes. No one told me that. You make a bunch of money and you just you're I'm a businessman.

Right? I mean, I so I, I had a lot of rude awakenings in my in my short career.

Steve: What was the IRS deposition?

Dave: I didn't pay taxes for, like, three years.

Steve: Right.

Dave: I had over, I think, $70,000 in back taxes. Yeah. And they interviewed me, and they're like, what are you doing? And then I think after I left the interview, both the people just felt bad for me. They're like, the guy has no clue what he's doing.

Yeah. He's not some guy. He's some crook who's trying to, like, dodge the IRS. So I got on a payment plan and licked my wounds over the years, you know, and we all make mistakes.

Steve: But you're talking about losing everything. You lost everything and then you're serving tables.

Dave: Absolutely. I went chapter seven b k with $70,000 worth of tax liens

Steve: on my back. But where were you I mean, because, like, you hear these numbers. Right? Like, you know, I was a millionaire. Right?

And then we lost everything. Like, what how high did you

Dave: go before you crashed?

Dave: I had, I think, not even a I just I didn't have a lot of houses. I was borrowing from private lenders, okay, and buying houses and then refi ing it out. I was but I was refi ing I was way over leveraged. So I was basically I think I only had, like, at the that I lost in foreclosure about five homes. It doesn't sound like a lot, but the amount of debt that I carried on these five homes was astronomical.

And I will make this point. Yes. I went chapter seven b k. Yes. I did previously have a lot of tax liens and things of that nature.

And, yes, I borrowed a lot from private lenders. I've paid back every single dime of private money that I've ever raised.

Dave: Mhmm.

Dave: I've never not paid someone back and, worked it all out with the IRS. I'm okay there too.

Steve: Yeah. That's huge because there are people that don't understand

Dave: Yeah.

Steve: Or I don't know. I think maybe they're just soul us. Right? Like, they'll take people's money for private money Yeah. And, like, think of, like, treat them like a like a corporate lender.

Like, no. Like, that's someone's family.

Dave: It's more important. It's the most important. Yeah. Like, well, the corporations can write it off and get bailed out.

Dave: Right.

Dave: Crony capitalism is gonna save it up. I'm saying

Steve: we'll bail out the corporations.

Dave: Absolutely. Unfortunately, it's it's disgusting to me. But To the private people and we to this day. You know, we've raised over $20,000,000 in private capital. We have a lot of private capital working on the street.

Every our lenders will eat before we eat. Absolutely. That's the motto of the company.

Steve: That should be the motto for everybody

Dave: It should be.

Steve: In this business. Alright. So you're serving tables. Yes. How did we go from serving tables to where we

Dave: are today? So serving tables and then I wasn't sure what I wanted to do. So I wanted to get into philanthropy, and that's what I did. I moved to California for a little while, and I was working with a nonprofit organization that built schools

Dave: in Guatemala. So I was like, okay. I get to travel a little bit.

Dave: I don't have a Guatemala. So I was like, okay. I get to travel a little bit. I don't have a pot to piss in. I don't know what the language, thing is on your podcast here, so I'll keep it.

But it's the truth. Mhmm. I had nothing to my name, and I decided I'm just gonna travel the world and live on the beach and do San Diego and this and that. And then I got the opportunity to work for a, a real estate education company, and that real estate education company was realestateinvestor.com. Mhmm.

And I'll give a big shout out to, Colin Andrews Egbert and Matt Lights. They were the co owners of realestateinvestor.com. And they gave me an opportunity to be their back of the room sales guy.

Dave: Mhmm.

Dave: And I thought it was pretty cool opportunity because I have the I have the real estate experience. My heart was always in real estate of all the work that I had put into myself. And, and then I also got to do sales, and it was a pretty loose schedule. And that worked for me being, a young guy in California. I had a lot of fun out there.

Yeah. And then, I was working one of their seminars in San Diego where I was living. Living, and, Preston Ely was having a Freedom Soft, event there. And they brought this guy, this nervous Filipino guy up to the, front of the room to talk about his experience. And he was, first words out of his mouth were, you know, I I live in Columbus, Ohio.

So I was like, hey. I'm an Ohio guy. I live out here now. But, that person was RJ Papino. Mhmm.

And then we linked up later in the day where both of us were just hanging out, drinking and smoking and being, you know, people in our twenties.

Steve: Being young kids.

Dave: Being young kids. And, and we stayed friends, and then we stayed friends for years. So I met RJ through working for realestateinvestor.com, and we met at a seminar that he was a testimonial for the product they were selling.

Steve: Got it.

Dave: And we stayed friends for years, and we started buying. So I learned from my experience here in Arizona. I learned what speculation is, and I learned I didn't wanna be a speculator. What is speculation for your viewers and listeners? Speculation is things will just keep going up.

Right. Right?

Steve: The party will never end.

Dave: The party will never end. Well, the party ends bad,

Steve: you know. And, it always does. Always shows up with the cops.

Dave: So I learned I didn't wanna be a speculator. Started buying cash flow properties with RJ in 2012, and and that's where we're at.

Steve: So then, you reconnected. What what year was that again?

Dave: We connected, I wanna say, probably in 2009.

Steve: 2009. Okay. So from 2009 till now, you guys have just been steadily building your

Dave: Well, no. No. No. No. We we started buying together in 2012.

I met RJ in o nine and we were just buddies. And I was still living out West and then we started buying homes

Dave: Mhmm.

Dave: In Columbus in 2012. And then I made the the plunge and moved back to Ohio, moved to Columbus in 2013.

Steve: Got it.

Dave: We already had about 12 rentals when I first came back.

Steve: Okay. Yeah. So something that I'm always harping on and I get flack for always harping on about it. But I always say, you know, partnership is just one of those things that it it's difficult. Right?

It can be good. Sure. It can be bad. Yeah. And, you know, you you shared with me that you guys have worked together for years.

Okay. So it's official.

Dave: We're not dating anymore.

Steve: It's official. Yeah. So you wanna talk about because you made a comment to me about, who knows how many companies have never had a chance because the partnership died before it started. Mhmm. Can you elaborate on that?

Dave: Without a doubt. The reason RJ and I have, well, core values is everything. Here's another cliche statement. We'll get this out

Steve: of the way. It's the

Dave: absolute truth, though. Core values, like, you can't always change what happens in a real estate market. Let's just stick stick to real estate. Right? Interest rates can change.

Right? Loan products can change. Values and prices fluctuate. This is like a market. There's a lot you cannot control, but what you can control is, like, who you are.

And RJ and I have the same core values. We're both hardworking guys. His, parents immigrated from The Philippines, and RJ is just a no nonsense kinda guy. That's just how he is. He wakes up and gets it done.

He holds me accountable for a lot of things. I would never be on the level that I am without a great business partner.

Dave: But

Dave: like we were talking about earlier, many partnerships never make it off the ground. Why? Well, ego has a lot to do with that. You heard my story when I was first starting out. I didn't wanna partner with anyone.

I was a lone wolf mentality.

Steve: And you kinda knew everything, kinda wanna protect your notes.

Dave: Of course. Oh, yeah. This is all mine. I'm I'm gonna be the best. My if you wanna hear a funny statistic, my first LLC that I ever set up, Professional Home Buyers of America LLC.

I'm taking over the country, Steve. I was a driven guy, but the reason it's crazy. Right? So when first starting out, there is an element of ego. Mhmm.

And I had to grow out of that and lick my wounds. I would not be a good business partner unless I had been through some trials and tribulations. Same with RJ. He'll tell you the same thing. He's been through previous partnerships as well that didn't work.

Yeah. It's like a marriage. Right? I mean, you gotta sometimes go through some relationships that don't work. But But RJ and I have the same core values.

We're both hardworking individuals, and every single role within our company, we've both done. And I'll tell you what partnerships and tell me if you agree or if you've seen this in your own experience or the viewers at home. The partnerships that tend to not work out, Steve, are the ones where one guy says, I'm gonna bring all the money, and the other guy says, I'm gonna be the boots on the ground. Mhmm. Because if that's the partnership and we're gonna build this portfolio together, the guy who's the boots on the ground is always gonna feel shortchanged.

Steve: Yeah.

Dave: It is so much harder

Steve: Feels like he doesn't get access to the upside.

Dave: Well, it's I mean, the guy who with the money, why do I need to partner with you to build this portfolio? Why not just partner one off with private lenders, borrow debt instead of giving equity of the entire thing that I'm doing, all the work, all the hiring, all the marketing, all the sales negotiation, right, with the sellers. The guy with the money, you know, is just literally why not instead of giving away half of your portfolio and equity to this person who's gonna be your partner and fund you, make them a lender and stick to the route of debt rather than equity.

Dave: Right. Does

Dave: that make sense?

Steve: Oh, absolutely.

Dave: Yeah. So a lot of partnerships fail, I think, because of the ego and, and just bad, bad terms. Right? And the whole money and boots on the ground thing, I just don't feel is a good arrangement. Arrangement.

Steve: Yeah. So but is there any other things that you've seen? Like, because I thought it was an interesting statement that, you know, how many partnerships have we not or how many business have we not seen or partnerships died? Have you are there things that you you could tell listeners like, hey. Don't do this in a partnership.

Dave: There's always going to be see, when it comes to a partnership, there RJ and I have a, a phrase. We say the hardest ship to sail Mhmm. Is a partnership because you cannot control circumstances and things are always moving. Sometimes one partner in this arrangement has breakthroughs faster than another partner. Sometimes one partner elevates on a different speed than the other partner.

And you have to be able to live with that and then still have the trust of not being a thief and stealing. Right? But what sometimes, you know, through the years, sometimes I gotta pick RJ up. A lot of times, he's gotta pick me up. To have that grace with your partner, I feel, is a very, important thing.

Yeah. So when the time comes when maybe you have had a break through or you make a contact, like, holy crap. This person I just met this guy. I made the contact, you know. Look at the partnership if you're really all in as one entity.

We made this contact. Just because I met the guy in the hallway who's now gonna fund, you know, $10,000,000 worth of our deals, we've always been very good about we, not me, but we've also both pulled our weight to the best of our ability and done every single role in the company. Neither one of us have ever been too good to do anything from collecting rent to knocking on a door. We've done it together. Everything.

Dave: And I

Steve: think there's something there that's kinda, under alright. Let's implied what what what you're talking about is that you're both intentional. Yes. You're both intentional in making this partnership work. Yeah.

Right? And it's just like a marriage. If only one side is trying, it's not gonna last very long.

Dave: And you know what? We and RJ is married. He's got a a lovely bride, Lindy. And, you know, Lindy has RJ and I are when we were start RJ was with Lindy dating

Dave: Mhmm.

Dave: Before RJ and I even got together. Yeah. So she, I mean, was trying to build a relationship with this man. They're now married with a beautiful baby. That's why he can't be here right now.

Mhmm. Baby Leonie is at home right now. But Lindy's put up with it too. She's been trying to build a relationship with this guy. Right?

RJ. And RJ is trying to build a business with this guy.

Dave: Mhmm.

Dave: So we've all three of us have had this dynamic through the years, but we've all stuck it out. And it it pays off. You gotta stick it out a little bit too.

Steve: Yeah. Right? So at some point, you guys partnered up around 2012. Yeah. One of the things we talked about was you you guys have been involved in hundreds I think I was looking at over a thousand flips.

Dave: Sure.

Steve: And you guys also have this 100 plus property portfolio. Which one you wanna talk which one started first or the other?

Dave: You know what? So RJ and I collectively, we have done over a thousand flips. So if you're counting all the wholesales, all the every turnkey I mean, we've sold hundreds of turnkey properties, and this is going back to o five when I started. Right? I mean, counting all that, but that's not what excites me, unfortunately.

And you do a lot of these podcasts. The thing to talk about is flipping and wholesaling. Look at it. Every single TV show out there is flip this house or, you know, House Hunters and the whole deal. You know what's exciting to me is the buy and hold, man.

And I would really love the opportunity to have your listeners and viewers walk away after today's podcast saying, you know what? Buy and hold is kinda sexy Yeah. Because it really is.

Steve: Well, that's the reason why we got into this.

Dave: Without a doubt.

Steve: Right? Like, we got into it for the money. Just, you know, we already addressed that. Real. Right?

Yeah. But then, also, part of that financial freedom and time freedom is buy and hold so that you can do whatever you want whenever you want. So important. So let's talk about, you know, how did you get to a 100 property portfolio?

Dave: Sure. Well, it goes back to the integrity piece and the core values piece of always paying your private lenders. Right?

Dave: Mhmm.

Dave: And we started our portfolio with a very expensive money, but you gotta pay to play. And that's why when people are first starting out, you know, we were paying an double digit interest rate plus giving up 50% of the portfolio when we were first starting. How do we think I know about the whole the giveaway half your portfolio? We worked for free a lot. Yeah.

But when we first started, we were borrowing, from some private lenders, extremely expensive.

Steve: Yeah.

Dave: And we had to earn our stripes, and we were buying in the c class areas, because if you're gonna cash flow 12% money, which we needed to do. Mhmm. You better have a low cost basis. Right? You're all in, meaning purchase and rehab, better be pretty low or you're not gonna be able to cash flow houses.

So we started in pretty much the roughest parts of the city of Columbus where you can, that you'll find. And we would be our program when we were first getting started was we wanna be all in, meaning purchase and rehab for 25,000 or less. Can't even buy build a garage for that. I understand. But that's what we would do, and we would borrow 12% money on a five year amortization.

And I got those terms from Joe Lieber, who we call uncle Joe up in Cleveland. Have you ever met Joe?

Dave: Mm-mm.

Dave: He'd be a great guy to have on the show. Yeah. Shout out to him. But so I can tell you right now what the payment is on 25,005 year, twelve percent money. It's $5.56 11.

Yeah. Might be $5.66 11. So punch it in your calculators here, everybody, your financial calculator. It's 55611. But I know that memorized it because we've done so many of these deals.

So early on, Steve, we're buying the houses in the worst part of town with the most expensive money you can get your hands on, barely cash flowing because we're only renting these things for 7 or $7.50. We still gotta pay taxes and insurance. But what what were we doing is just hammering down the debt. We were just hammering down the debt because it's only a five year note. Right?

So we're paying off so much principal. We still own some of these houses. We've refinanced them, you know, obviously or or their own free income.

Dave: How did

Steve: you hammer down the debt?

Dave: By just paying the payment. Because the, you know, a five year note, there's a lot of principal being paid with every one of those $556 so it's a five year amp, not

Steve: a five year balloon.

Dave: Five year amp. It was not interest only.

Steve: Yeah.

Dave: Five year amp. We didn't understand things then.

Steve: Man, five year amortization is aggressive.

Dave: Aggressive. You know what? But we were broke. We were extremely broke. So we had to wholesale going back, circling back around.

Hey. Wholesaling is not sexy. Well, it is sexy. Right? It's essential when you're building a portfolio.

You have to keep the lights on. We learned that. And, actually, it wasn't as easy to wholesale in 02/1213 as it is right now. I mean, there's zero, you know, supply out there for the high demand. But what we were doing then is we would be hammering down this debt with a small portfolio we continue to build.

And instead of wholesaling properties, we were selling turnkey properties. So we built a whole turnkey business, Columbus turnkey, have great people who have helped us along the way, but that's what we would do. We would borrow now private money, interest only money, new money, and even that was ten and two. And we would fix up houses and then sell them to out of state investors in other places. And we did a ton of good business.

I mean, we have serviced, you know, hundreds of investors and and, helped them build portfolios because they live in high dollar markets like Phoenix or California, but they wanna start building a portfolio. So we were the supply, and that was our flipping business while we built the portfolio.

Steve: So turnkey was, how you were generating income

Dave: Correct.

Steve: While you're trying to acquire rental properties.

Dave: Correct. Got it. And yep.

Steve: And in in doing the the, the turnkey, I mean, just for these people that are listening, what is an example of, you know, just doing one turnkey at that time? What was the cost? What'd you walk away with?

Dave: Sure. Well, I can tell you all the reasons to not get in the turnkey business, and I'll I'll touch on that. Mhmm. Because it always feels like, you know, you're doing deals and making money, but at the end of the day, you have no money. And an average deal would be we were all in for 60 k and meaning purchase and rehab.

And then we would turn around and sell it because it was all fixed up and rented out to a conventional buyer. So they would come in with for, like, 80 or 85. Mhmm.

Dave: And

Dave: they would come in, you know, with their loan. And then essentially, you know, in theory, gross were making around 20 or 25. Right?

Dave: Mhmm.

Dave: But the thing is with the turnkey business is you're dealing with conventional buyers who are gonna, you know you gotta meet the appraiser's needs. You're like, you're dealing with these people who, are using conventional money. It's there's so many more hoops to jump through is what I'm getting at. It's so much easier just to wholesale. If you were just starting out, I would say, don't even really get into the turnkey business.

If you're buying a house and fixing it up and getting it rented, keep it. I mean, so many of these houses, I wish we would have kept them all. It's just some such a better model to wholesale if you're flipping properties than to do the rehab. Where's the risk come into play? So in any real

Steve: estate property.

Dave: Well, yeah. I mean, you you raise the private money. There's risk. You're fixing the property up risk. You're getting the property rented for somebody else risk.

Mhmm. There's laws and whatnot. Yeah. So you're taking all this risk and then maybe you gross 20 k, but that's highly taxed. That's earned income at the end of the day.

Yeah. That's, you know, short term capital gains. You're you're paying tax through the nose.

Steve: And there's also the time component. Like Time.

Dave: That's the

Steve: reason why I

Dave: Opportunity cost, brother.

Dave: That's the

Steve: reason why I'd rather make 10 in a wholesale

Dave: Amen.

Steve: Than 20 on a flip.

Dave: And we didn't know that until, you know, until and we do now. We learned a lot of lessons, but that's what got us good at buying properties, getting them fixed up, getting them rented out. So now we're at a place where we can just do it for ourselves.

Steve: Yeah. So, So, it's funny. I I know your name was brought up to me a long time ago. I was trying to say, you know, who should we get on? But I didn't really know who you were until we joined CG because you're the one that's doing the what was it?

The the the charitable arm? What is it? The generous genius. Generous genius. Absolutely.

So for those of you guys listening, that is how we connected. Yeah. And so I I heard you ranting on a Facebook live. Recently? Yeah.

About how single families where it's at.

Dave: Okay. Here we go. Here we go. Let's talk about it.

Dave: Keep in

Steve: mind that we've had Rod on the show. Okay.

Dave: Rod's great.

Steve: And Tim and Tim's coming at some point. I think it may be in April. So just set the ground. Okay.

Dave: So what you're referring to is mister Alex Pardo's podcast Yep. Where he did a debate. We were just got out of a crazy political time, and so we thought Was it crazy? No. Not at all.

Steve: It seemed pretty mild.

Dave: Yeah. Pretty mild. Right? Still going on, unfortunately. It's so negative.

Steve: It is.

Dave: Right? But mister Alex Pardo, who has another podcast, the Flip Empire podcast, and he said, hey. I really wanna do this debate, single family versus multifamily. In fact, I think I started it because I went on a Facebook rant all about what

Dave: I remember.

Dave: Calling out Tim Brotz. Mhmm. Tim Brotz is my friend. Let's start let's start right here.

Dave: I just

Dave: I you know what? We were coming out of quarantine, Steve. We were coming out it's it's time to ruffle some feathers and have a little fun is what we were doing. But Right. You know, I'm I'm a big advocate of single family, but let me start here that first off, Tim and Rod are two phenomenal multifamily investors.

In fact, if you're going to learn multifamily, you gotta learn from people who do it right because there's so many crappy syndicators and so many crappy people teaching this that I wouldn't touch with a 40 foot pole. Tim and Rod got their stuff together. Tim has had my back. He's a Cleveland guy. I'm a Cleveland guy.

I've been to the Bratz Manor up in Cleveland. I've taken training from Tim.

Steve: So Mhmm.

Dave: He's somebody I highly respect and and really like as a genuinely like as a person. So I was just having a little fun and I was taking the position. I'm Rocky. He's the big Russian because he is a quite a, sizable portfolio. Think I made a lot of valid points on why, you know, building a single family portfolio is actually much better than building a multifamily portfolio.

We had a lot of fun with it.

Dave: Mhmm.

Dave: They made a lot of great points as well. And at the end of the day, what we all determined because, look, RJ and I, we're not opposed to multifamily.

Dave: Mhmm.

Dave: We're all in the cash flow business, and you can generate massive cash flow from commercial. And we own apartments right now. We have some apartments too. So I'm not fully opposed to it, but I think some pretty good points were made on the on the position of single family over multi.

Steve: Sure. So what is your argument?

Dave: Well, I mean, if we started with acquisitions, we'll be let's start with the my opposition's argument first, which they will wipe the floor with us is scalability without a doubt. It is much, you know, more scalable to buy a 100 unit apartment building than buying one house one off at a time. You you I will not argue that, and that's where we started this thing. That's where we ended that. However, when when you're first getting started, and you're building a single family portfolio or even if you're not getting sing just getting started, there's so many more creative ways and so much better terms on money that you can do when acquiring a single family house.

You can take it subject to owner financing. You can create way better terms. And, when you're buying an apartment building, the investor they're an investor. They're savvy. They're not gonna give you the same terms as Joe lunchbox Joe homeowner who just wants done with this house.

So, you know, on a smaller level, they've got the scalability thing. That's That's out the window now. Okay? I gave that up. So now but there's way better ways to acquire single family homes than multifamily.

And your private lenders, if you're raising private capital, are in a much safer position. If they're lending you money and they get a first position note in mortgage or deed of trust against your asset. It's far safer than putting their money into syndication. What if things go array with the multifamily operator? They're gonna have a hell of a time getting their money out.

So it's much safer play for your private lenders. You can easily diversify so much better. Right? Oh, and here's the here's the icing on the cake, which, you know, we can just end it here. Think of the think about the demand factor.

In any business, Steve, right, there's a supply and a demand. I don't care if it's a lemonade stand. If you have the shiniest lemonade stand on the block, but no one has a demand for your product, you're not gonna make any sales. Right? Mhmm.

Everybody wants to be in single family right now. Could you imagine being on quarantine, you got to homeschool your kids, and you're working from home, and you're living in a dingy apartment? The only reason that people want to live in an apartment is typically because, you know, they have to. Mhmm. Now granted, there's great things where you don't have to deal with the maintenance and things like that, but we are seeing a massive demand from people fleeing fleeing apartments right now.

Steve: Right.

Dave: And they all want the space. Right? They want the space. They wanna be the crime is higher in these apartment communities. Now I know, granted, my opposition, Tim and Rod, they do a great job.

I've seen Tim's properties. I've watched properties with Tim. Mhmm. Okay? But not everybody operates it on a high level.

Right?

Dave: And a

Dave: lot of these guys are in the multifamily business and they shouldn't be.

Dave: Mhmm.

Dave: And it's a their tenants desire to be there is a reflection of poor management and operations, and they all want to hightail out of there and move into single family. The demand for single family has never been higher. In fact, the big money, Wall Street money, is fleeing in look at Invitation Homes. Right? American Homes for Rent.

They're building thousands of homes. Right? Single family homes.

Steve: Built to rent.

Dave: Build to rent is is massive. Yeah.

Steve: That's interesting. Saying. Yeah. It's an interesting shift the last couple of years. Rent are

Dave: going up for single family. Rents are not going up at the same rate in multifamily.

Steve: So I'm sure you guys addressed this, but enlighten me. Bonus depreciation. Sure. Isn't that better off in multifamily versus single family or you

Dave: Not better. It's the same. You can do the same stuff. You know, we we do it as well. I mean, any operator in multifamily show the depreciation's phenomenal.

You can do the same stuff with, with single a portfolio of single family homes as well. And one of the arguments that, the opposition made was, oh, well, what about the, you know, the financing? You know? It's not even gonna show up the, non recourse financing. You could get non recourse financing on a portfolio of homes too.

Right. So pretty much oh, here's another big factor. The reason I feel that single family investing is really more desirable than a multifamily, property is the exit strategies. I don't know if you own rentals. I know you've met a lot of people who own rentals.

Anyone building a portfolio will tell you that when building a portfolio, sometimes you gotta pair off properties. You gotta free up cash flow, man. This isn't, you know, just, you know, a walk in the park. Right? Right.

How are you gonna pay off an apartment? What are you gonna do? A converted and so having the separate parcels and the multiple exit strategies is very favorable when building a single family portfolio. Think about the exit strategies. You can sell it on terms Mhmm.

Like a land contractor owner financing. You can do a rent to own. You can give an option to buy. Yeah. Defer the maintenance to the tenant.

Right? You can sell it wholesale. You can sell it to a tenant, help them get an FHA loan. Right? So when creating cash flow and building a portfolio, they're, you know, having single family houses and multiple exit strategies, second to none.

Dave: So

Steve: it's the flexibility.

Dave: Flexibility.

Steve: Yeah. And then, you also made a comment, that leverage is a good thing. So we kinda talked about you know, we kinda got back and forth. I was saying that Kiyosaki highly encouraged debt. Sure.

Right? And then, you know, the banks Yeah. Were allowing people to over leverage.

Dave: Yes.

Steve: But, you know, you're you're one of the statements you made is a leverage is a good thing. You wanna talk about that?

Dave: I do. But I think safe leverage, man. I'm not gonna sit here and be an advocate of overlevering.

Dave: Mhmm.

Dave: Okay? I probably meant by that the leverage is better for a private lender on a single family home without a doubt.

Steve: Yeah.

Dave: Right? But ultimately, even syndications can be safe with the right operator. So that's the point I'll make, you know. But, leverage is a good thing. I mean, mean, you know, we're in the cash flow business, and you can't save your way to riches.

Real estate's a phenomenal asset class, whether it be apartments or single family houses because especially right now, Steve, the interest rates are ridiculously artificially low.

Steve: It's bonkers.

Dave: Artificially low. I encourage investors to take advantage of the current leverage available to us without overlevering. I'm I'm not an advocate. You know, I've I've had to lick my wounds, man. I've been upside down too.

I don't encourage anyone over lever, but I encourage everyone to get as much low interest long term debt secured against cash flowing assets as you possibly can. And the safest play, the king snake of real estate asset class right now, it's not even just my opinion, Wall Street Journal just posted on, November 10. You know, rents are going up in single family houses. That's where the big money is going right now. Yeah.

Single family starts, new construction starts are up from post pandemic highs. They're it's up 7%. Right? Right? Multifamily starts is down over 50%, over 40%.

Don't quote me. I think it's 43%. Okay? But the builders and the big money behind the builders of multifamily, they're pulling out.

Steve: Well, they're seeing

Dave: hitting the brakes.

Steve: The response with COVID. How everyone responded when COVID occurred. Let's see. Tech really appreciates your comment about the the hookers with teeth now. So that's plus.

So our our market is improving.

Dave: Hey. Phoenix is where it's at, man. I drive down the 202 right now. I could I can't even recognize it.

Dave: When I

Dave: used to live out here, I used to see the ASU Stadium and and whatnot. I see nothing now. It's just no. I see buildings. You know?

So

Steve: let's see. Guys, please ask your questions. Happy happy, to answer your guys' questions. So lots of great comments. And see, Pace is in the room.

So that's something I

Dave: text him the other day.

Steve: Yeah. I think he was in Dallas. I'm not sure if he's back yet. But definitely gotta connect you guys. What's CREAM?

That's an interesting The CREAM?

Dave: Yeah. Well, so the CREAM started out as, we have a local community.

Dave: Mhmm.

Dave: And shout out to all of my CREAM, members and friends. That's what we are. And the CREAM started out as the Columbus Real Estate and Money Group. And really, it's just been a group that came together, to share resources specifically with construction. Really, that's what it's become.

You know? And we've done a great job in within our local community to weed out the fake gurus and weed out because no one has time for that. You can find that stuff anywhere you want. So our local community has developed really into sharing resources when it comes to construction. It's really what it's become.

It's it's really an an effective tool. We use it all the time for our local community. But then we made it we took a vote as a group, and we decided we're gonna keep that group local. So the cream is always gonna be where it started, the Columbus Real Estate Money Group. If you're not local, it's don't even apply to get in because we really, really do a good job of of weeding out.

People just don't belong there.

Dave: Mhmm.

Dave: But a lot of people want to get involved with what RJ and I are putting out. We put out videos constantly about raising private capital and doing this stuff. So we've also have a national cream, which is just cash flow, real estate, and money. Mhmm. And that's what we're all about.

So we're all about helping people. Really, who we speak to, Steve, is somebody who maybe has a small portfolio. Maybe they got a couple rentals. And RJ and I, through our experience and through the National Cream, okay, cash flow real estate money, we have a website, risewiththecream.com. It's under construction.

But, you know, we're we wanna help people take a small portfolio and scale it into a big portfolio. We wanna help someone take who has five rentals and scale it up to 50 rentals if that's what they want. Mhmm. Because that's what we've done. So the cream has two elements, the local element, which will stay local, and then our national brand, if you will, risewiththecream.com is cash flow real estate and money.

Steve: So you mentioned the private money component. Let's talk about the private money component.

Dave: For sure.

Steve: What are you guys doing right now to raise private money?

Dave: Oh, man. So with experience comes better terms on money, and that's why if you're just getting started, you gotta pay to play. I have some advice for somebody who's just getting in the game. Well, you know, first off, you gotta pay to play. So what if it's expensive?

Don't pay 12 and two if it gets you in the game. Because as you get a credibility behind you, as you get a credibility kit, if you will, the terms of money will go down.

Steve: Right.

Dave: When you're borrowing money, you don't necessarily want to borrow money from money people. Right? You know, you come to me for a loan or you come to, you know, half the guys that we hang out with, the terms are gonna very be very much be lopsided into our favor because we we do this for a living. Right?

Steve: And we have greater opportunity cost.

Dave: Absolutely. Big big time cost.

Steve: Yeah.

Dave: Right? So you wanna work with somebody who maybe has money, especially now with a four zero one k. You can help people borrow against their four one k with the CARES Act, who doesn't really have the same deal flow or opportunities as the operator does. So you wanna work with, like, corporate Joe or doctor Susie or somebody who does well but really wants to be a passive investor. Sure.

They understand real estate is an opportunity to grow and it's a good opportunity to make money, but they don't wanna be an active investor. And then, you know, really, if somebody new can just explain, and this goes

Dave: back to why I love single

Dave: family, that their money is secured with a first position note and deed of trust, it's really a no brainer. It's much better than the stock market.

Dave: Right. I mean,

Dave: the stock market is going bonkers right now because the Fed is injecting so much trillions of dollars and backstopping the whole thing. That's not sustainable either. It's fun to watch.

Steve: Real.

Dave: It's not real. Right? I mean, you could wake up one day and we're at war or something like that and your four zero one k turns into a two zero one k. Mhmm. So I believe that, you know, if your listeners and viewers have the opportunity to just educate regular people, not money people, you know, that their money can be secured and much safer, backed by a real estate asset.

The the demand for real estate is ridiculous right now. And if your viewers and listeners have the ability to find good deals and find off market opportunities where if they're listening to this podcast, I mean, 80% of the stuff that comes out, and we're probably gonna talk about it today, finding deals. If you have the ability to to find deals, it's not that difficult to educate someone on why it's a much better play for their liquid capital to be a private lender. It's just about educating people who are not money people.

Steve: Right. And a lot of people wanna invest in real estate. Most of them don't know how. Correct. So for them, they'd be happy to work with someone, an operator that knows how as long as their money is secured.

Yeah. Yeah. So what do you guys need right now to find deals in in collections?

Dave: Find deals? We have four cold callers

Dave: Mhmm.

Dave: Banging the phones. Four, amazing four cold callers if they get the opportunity, if they're watching. We're we're averaging between ten and fifteen leads a day, and we're working three markets. We're working in Columbus, Cincinnati, and Dayton. And you know what we're doing a lot, man?

We're wholesaling a lot just to the hedge funds. There's There's no no shame in our game. You know, we tell a lot of people are doing that. Right?

Dave: Mhmm.

Dave: Because they pay a premium because Wall Street is gobbling up as much real estate. We're becoming a nation of

Steve: what you were talking about.

Dave: Absolutely. Yeah. It's safe for them because they have free free money, basically, 1% money or something like that. They're not too concerned. So we're we're wholesaling quite a bit to the hedge funds, have relationships with them.

Steve: Wholesaling or or or or wholesaling to them?

Dave: Whole or

Steve: double escrow? Mostly wholesaling. Yeah.

Dave: Yeah. They got it figured out.

Steve: Because over here, they don't wanna pay our wholesale fees.

Dave: I know. Well, there's ways around that too. You gotta figure it out. We're all smart people here.

Steve: Right. But Okay.

Dave: So

Steve: I mean, what do you

Dave: any of us double close it. Yeah. You know? There's always way in it's look. Here's the thing.

Here's the beauty about what's going on in in our markets. There's more than one, more than one guy at the show. There's more than one hedge fund buying. So Right. If somebody doesn't want to, you know, pay wholesale fees, we do have a little bit of leverage now as the operators, and I take the position of defending the operators Yeah.

Till I'm blue in the face. I'm not on their side. Mhmm. I want us all making as much money as we possibly can. Right.

So we'll pin them against each other and do what respectfully do that. But, you know, if somebody's opposed to you making money, it's probably not best person you should be doing with. I would find other outlets. Do what you gotta do. You still gotta sell Right.

To who is willing to buy. But, yeah. Explore creative options and doing a double close or something of that nature. But, yeah. So that's what we do.

So we have four cold callers banging the phones, do a little direct mail, do some RVMs. I know everyone's afraid to do RVMs. It's like, look, if the FCC is coming after Dave Perichin, we're the country's going to hell in a hand basket. If you're worried about me, who am I? I'm a nobody.

Right? Somebody wants to be removed from the list, removed from the list. I mean, we so we we do whatever it takes, man. We bang the phones. We do RVMs, primarily those two.

We do some direct mail and a little bit of texting.

Steve: So how many contracts are you guys doing in a month?

Dave: We are doing probably 10 to 15 a month. Okay.

Steve: Okay. And out of those 10 to 15 let's just call it 10. Sure. Out of those 10, how many keeping? How many are you dispositioning in other ways?

Dave: Probably only keeping two.

Steve: Okay. So you're keeping two.

Dave: Yeah. It's very hard to hit our buy box with the lack of inventory available.

Steve: So you you keep the two, refi it, whatever.

Dave: Sure. Just buy it with private money. We'll get it fixed up and then add it to the portfolio and, take it in for a BRRRR, you know. Mhmm. The lenders on the BRRRR strategy are being more conservative, but we don't care about that because we're not trying to pull out all every dime of equity.

That's what gets you in trouble anyway.

Dave: Yeah.

Dave: We just want the we want low interest long term debt. So that's a a very common play for us, is buying a property with private money, fixing it up, getting it rented, and then adding it to a portfolio of other homes that we have private money on Yeah. And doing a bulk refi.

Steve: Alright. And then what's happening with the other eight?

Dave: Well, we are looking at more creative opportunities always, you know. But some contracts just go to the wayside, and that's unfortunate. We are exploring ways to turn deals from the trash into cash.

Dave: Mhmm.

Dave: We don't have a very good strong play at the moment. That's a that's a a hole.

Steve: But, are somebody getting wholesaled? Somebody's

Dave: getting wholesale?

Dave: Oh, wholesale. Yeah. For sure. So there's always a few contracts that go to the wayside if we can't get a better deal. But out of of the five, we'll call two keep, wholesale seven, and the rest just we can't do anything with.

Steve: Got it. Yeah. So you guys are still actively wholesale?

Dave: Absolutely. Absolutely. It's a great time to wholesale, especially selling to the funds and whatnot, because you know what? You look better in the eyes of the bank anyway when you have a strong cash flow coming in every single month, 6 figures a month. Yeah.

You know, it looks really good for the bank. And if somebody doesn't have a huge portfolio of rentals right now, you need to show that wholesale income or no bank's gonna wanna talk to you.

Steve: Right.

Dave: But the end play is to get as much low interest long term capital working on the street, pay back our private lenders, and having a strong wholesale business and having tax returns and and having a strong p and l from wholesaling, will allow you to get better terms on the buy and hold.

Steve: Right. And that's kinda what we had talked about offline is that, we all get into wholesaling again for the money, but the long term play Sure. Is the cash flow. Without a doubt. And so, you know, the the comment that was made before was that, you know, wholesaling is kinda like the hamster wheel, to which I would say, if it's a hamster wheel, it's a hamster wheel made in Dubai, where it's gold plated and it's a gold hamster in a gold

Dave: It's wonderful, isn't it?

Steve: It's it's a glorious Yes. Hamster wheel, but at the end of the day, it's still a job.

Dave: It's still a job because it's not a saleable business. We had talked about what is a business. Business comes with a book of business, and and it's a saleable business. If you own a auto mechanic shop, you have people who've been loyal to you, and they you know, if you get ready to sell this business, you sell the book of business along with it. Yeah.

In real estate, it's impossible to have a book of business because the people who are buy or our clients, if you will, in a wholesaling business are the sellers.

Dave: Yeah.

Dave: Now the buyers are not loyal to us. They'll go to the next guy. Of course, they will.

Steve: Right. They're investors.

Dave: They're investors. So the sellers, though, is pretty much a one trick pony. They're gonna sell us one house. That's not a book of business.

Dave: Yeah.

Dave: We're always finding the next one.

Steve: Traditionally one off, very transactional. Correct.

Dave: But essential in building the portfolio, I really think that should be a strong focus to all the listeners is use wholesaling as a tool Mhmm. To help you build something more long term.

Steve: Absolutely. So Tyler Smith wants to know right now in this market, is it better to pay down property with the cash flow or save that money and buy more rentals?

Dave: Buy more rentals because the terms are so low right now. Why why would you know, rates are only going up.

Steve: It's ridiculous.

Dave: It's ridiculously low. So, you know, you don't it's good debt. Okay. We've already talked about not getting overleveraged. Mhmm.

But, you know, why are you gonna pay off 3% money? Not to mention the value of the US dollar inevitably is going to go down with all the money that they're printing. And if somebody's a bank is willing to give you thirty year money, I mean, the dollars that you're paying back this loan thirty years from now, twenty years from now, the whole deal, are worth less in the future than they are now. Why would you use more valuable dollars now to get rid of the debt? Let it go around for as long as you possibly can.

Steve: Yeah. Great. Great point. Let's see what else was there. Dave Phoenix Fish is Dave.

I remember the blue convertible Audi.

Dave: Who's that?

Steve: Phoenix Fish is all it says.

Dave: Phoenix Fish.

Steve: Davis says, Steve needs to do more TikTok or need to do TikTok videos. Go to my TikTok channel. Ask Steve Trang. I am on TikTok. I am posting videos, not dancing, though.

Dave: Come on, brother. You gotta step your TikTok game up. The people the people want it.

Steve: I am I am as I'm on TikTok and I'm watching these instructional videos, I might start pulling some of these dance moves because I'm learning how to dance on TikTok. Let's see what else is here. Orlando says prefer I asked prefer marketing strategy. So you already mentioned banging the phones.

Dave: Cold callers.

Steve: RVM.

Dave: That's where it's at. And be be relentless. Here's the thing. We can talk about this. I think your viewers and listeners will get a lot of value out of it.

Don't expect too much out of your cold callers. Cast a wide net.

Dave: Mhmm.

Dave: Meaning, let your cold callers dial. And anyone who doesn't say go screw off or Go

Steve: to hell.

Dave: Go to hell, that's a potential lead. So now it's gotta go over to a more qualified salesperson, like a good old fashioned American salesperson who knows how to run comps and whatnot. I think it trips up a lot of, wholesalers and investors who they expect too much out of the cold caller. They want them to pull up Zillow comps and do all this. And it sounds good in theory, but just have the guy move on to the next call.

Anyone who's not a hell no, you gotta send it over to somebody internal, either yourself or your qualified sales manager or sales rep, and let them work it from there instead of trying to have your cold caller do all this craziness.

Steve: Daniel Nguyen, wants to

Dave: see if

Steve: you can clarify what over leveraging is.

Dave: Over leveraging is the house is worth 60 and you owe 70 on it. You borrow too much.

Steve: And then, follow-up is would you do a HELOC or a thirty year cash out refi?

Dave: Both are good and both serve its purpose, but a lot of banks won't do HELOCs right now unless it's an owner occupied property. So, you know, what you gotta watch out for and I spent all morning negotiating with banks. I got meetings on Monday with different bankers. I like the HELOC play because I know somebody in our group. In fact, I think you were busting my chops online today.

Dave: He it

Steve: Definitely was busting your chops online.

Dave: You were definitely yeah. But one of the guys in the group, he made a $300,000 deposit to a local bank, and he got a $2,000,000 line of credit at four and a half percent. Mhmm. That is very serviceable. That's very good because you can replace your flip money.

If you're paying ten and two right now and you have access to a HELOC, he you know, it's basically also called a wholesale line of credit. That could really cut down your cost. So a HELOC or a a line of credit, if you use that money to and you only have to pay for what you are using, that's the benefit of the line of credit. Yeah. But it's gonna save you so much cost of private money.

But the thirty year cash out refi is good too because if you're refi private debt on something you plan on keeping for a long time and you're paying 10% to your private lender and the bank's going to refi you out at 4% or whatever they give you, that's that's where the refinance comes into play. So there are two tools in the tool basket, you know, or the toolbox that both serve its purpose.

Steve: So I guess I need to stop busting your chops.

Dave: Stop, brother.

Steve: And really I

Dave: didn't do anything.

Steve: Really? Well, I mean, I think I have to. But Yeah. But I guess I need to go and figure out who commented about doing 2,000,000 line of credit with 300 I mean

Dave: I know who it was.

Steve: I can do that right now.

Dave: It's easy. Jeff s.

Dave: Alright.

Dave: Jeff Shabrick. Yeah. My buddy. Alright. Tom Birmingham.

Steve: I'm gonna talk to him.

Dave: That's right.

Steve: And then do you self manage?

Dave: We do. But we actually work in tandem with property management companies. So when you are an operator, we've we've all gotta play into our strengths as human beings. Right? And we let the property management company we still pay for their services, not a premium, but but we use their entire internal staff for all the bookkeeping and keeping everything good because they have it all set up through AppFolio and whatnot.

Mhmm. But we still get to dictate and we're in charge of two things that are the most important two things when you're an operator. It's the construction. Right? Because if you leave that to a third party property manager, they're gonna they're gonna bleed it.

You know? They're gonna mark it up and we feel that we can manage construction better than they can. So we take that off of their plate and we also handle all the tenant placement. Because one of the most important things when you are building a portfolio, and this is one of the first lessons that we've learned in real estate, is it's all about the setup. Right?

You've gotta sit down with the resident of your property, you or a leasing agent or somebody who has a vested interest in this asset. A third party property manager says sign here, press r, the last copy is yours, get them out of the office. Right? Yeah. Yeah, man.

That doesn't really fly as well as sitting down with the tenant, laying down what the rules are gonna be, having that conversation. Your success rate is drastically going to increase if you get to have that conversation or have a system in process to set the tenant up for success and set this asset up.

Steve: Your your love or hate of owning properties will be directly proportional to your relationship to how much you love the tenants or how or or how quality the tenant is.

Dave: Well okay.

Steve: And go ahead.

Dave: No. I was just gonna say a quality tenant, man. I mean, sometimes, you know, big things come in small packages. What what's a quality tenant? Sometimes the one that looks the best on paper is not the best, you know.

And sometimes the person who doesn't look that great, but they want an opportunity to prove themselves and and whatnot. So it's it's very difficult to judge, a book by its cover in property management for sure. Yeah.

Steve: We've learned that.

Dave: Definitely got

Steve: some lesson lesson.

Dave: So to answer the question, we still utilize third party property management, but we utilize their accounting systems

Dave: Mhmm.

Dave: More than anything to produce quality reports, because we that it saves us from paying a staff member to do it because they got it down pat. But we still and the money collection. We have them because it's a professional office. RJ and I took our business virtual, so we don't have a shiny office. But sometimes when somebody's dropping off several thousand dollars, they want to see a professional establishment.

Yeah. Right? So we we kinda maximize the third party for the money collection and for the leasing paperwork, and for the, like, accounting piece.

Dave: Mhmm.

Dave: And we handle the tenant placement and the construction.

Steve: Got it. And Joey Ward wants to know if he wants to send a deal to you guys, how would he

Dave: do that?

Dave: Send it to me. Send it to, walker@sellhousecolumbus.com. He's our acquisitions manager.

Steve: Perfect. And then TJ Lee wants to know, what do you think about using low or no interest credit cards for buying or rehab?

Dave: I mean, everything serves its purpose. It depends on the deal. Right? Mhmm. You know?

I'm talking to some guys, who offer that kind of service. You pay a couple 100 or you pay a thousand dollars upfront or whatever, and they're gonna get you these lines of credit. I mean, money's a loaded weapon. It's always debt's a loaded weapon. You know?

So there's always a place for 0% money or anything. It's it's a deal by deal basis. Just be smart. I mean, if you're getting in the game and let's pretend that, you know, you've got to your private lender will only give you, say, loan to cost money. So let's say they give you 90% loan to cost.

And what that means is, you know, let's say the ARB is a 100 k and you are all in. You're all in for is, you know, 60 k. They're only gonna give you 90% of what you need.

Dave: Mhmm.

Dave: There's gonna be skin in the game. And sometimes it's very down payment from a 00% interest source, you know, and and that will allow you to scale to fulfill that void of of, like,

Dave: a down payment. But, again, it's all a loaded weapon at the end of

Dave: the day. You just gotta a down payment. But, again, it's all a loaded weapon at the end of the day. You just gotta do good deals.

Steve: Absolutely. Steve Carlson says he loves your five year amor model. Are you shifting your business model at all in 2021,

Dave: or are

Steve: you just staying the course?

Dave: We're not doing the five year business model anymore, everybody. We can't find something to be all in for twenty five k. Yeah. So that was a five year AM model. And if you're in a lower dollar cost market, smaller city, I encourage you to explore that.

But right now we're just borrow when we're borrowing private money, we're borrowing interest only money so that will allow us to cash flow before we could refi. Because an amortizing loan is going to be have a higher, payment because it's PITI. Right? Principal and interest plus the taxes and the insurance. An interest only loan, there's no principal being paid down.

So it allows you to keep your payments low, before you go and get the good money, which is a refi. So we don't do five year am deal anymore. I wish we still found deals where we could be all in for '25, though.

Steve: Yeah. But, is anything changing at all in 2021?

Dave: Just lower we're getting as much low interest long term debt on the street as we possibly can.

Steve: Yeah. Yeah. That seems to be everyone is a big operator. Everyone is chasing the

Dave: the boat. Absolutely. We all should.

Dave: Yeah. You should. And then

Dave: their rates aren't going up anytime soon.

Steve: Right.

Dave: Lenders are still lending, and I encourage everyone to get this bank money on the street and get it working. It's gonna serve you for many years to come.

Steve: So Nelson Castillo wants to know, can you talk more about this HELOC with a million dollar line of credit? Was this a HELOC attached to a property? Because it sounded like you said you put 300 k in the bank and you get proof of a HELOC.

Dave: It wasn't me. It was somebody else. It was our friend. But I can tell you I know enough to be dangerous. It wasn't me that got this money.

However, I did put it out to a local group that I'm looking for this money now.

Steve: Yeah.

Dave: So the HELOC, I would assume, it is not collateralized. It's probably collateralized against the cash that they made a deposit. So this person put 300 k into a local bank

Dave: Mhmm.

Dave: And then the bank allows them to have this $2,000,000 line of credit. And I would assume that this money, if used for purchasing a flip, the flip is probably going to be collateralized as well. Yeah. So that's probably how it's set up.

Steve: It's part of the qualification process.

Dave: And

Dave: not to mention, you know, HELOCs are great, and they can lower our cost of capital. But remember, a HELOC can be taken away at any time. So going back to the question about I

Steve: remember that.

Dave: You know what I mean? But shit. You remember.

Dave: I'm yeah.

Dave: I remember too.

Steve: I mean, the the Yeah.

Dave: It's Washington Mutual. We're we're out of business now. It's like, what? I thought I could just keep getting $30,000 checks from you guys. You know?

Steve: Yeah. It was, because Don Costa and I have talked about this, in in other meetings is that we both suffer from PTSD. Right? We still we we survived

Dave: So do

Steve: I. The last one. And, there are some things that you took for granted. Cheap money always being available, running your business on a credit, and that can

Dave: Gone in an instant. So they can take those HELOCs away from us, but that is where, a thirty year thirty year refinance, you know, like a cash out refinance, excuse me Mhmm. They can't really take that away from you. Right.

Steve: No. They can't. It's already tied to the assets.

Dave: It's already tied to the assets. So there's a there's room for both.

Steve: So, before we started, when we were chit chatting, you made a comment that you're in a really good spot in your life, really good mental spot. Yes. What's that about? That's awesome.

Dave: I have love in my life. I have a a beautiful better half who's right in the other room, you know, and and I'm just happy. I'm I'm genuinely in a space where I mean, RJ and I have struggled for so long, you know, and I see his growth and I see him growing and he's got a beautiful little baby at home and, you know, now I got, an amazing relationship hustle and the grind is still there. We're still very driven individuals, but we're focused more on our happiness and we're creating more opportunities where where we can travel, come out and do stuff like this.

Steve: Yeah.

Dave: Scott done spending, you know, several days shooting guns with friends in the desert and I love this stuff. And, you know, we missed out on a lot of this stuff because we started in the business so early and just struggled for so long. And now, you know, another thing that really delights me is empowering leaders within our team. Look. Somebody said, I'm gonna send you a deal.

It's not coming to me. You know? It's coming to someone else because we've built the model. We put the time in, but we also invest in our team. And watching their growth and development, it really makes me feel good.

Yeah. So that I think all contributes to this state of mind that I'm in.

Steve: Yeah. So enjoying the fruits of your labor.

Dave: I'm enjoying the fruits of my labor and I'm I'm excited to like work with people. I'm excited that my own personal development has reached a whole new level, you know. And I've just lost a lot of the ego, you know, that has come and, you know, quite honestly I just, you know, basically I'm I'm totally free. You know, I I'll tell you I was taking medication for a long time.

Dave: Mhmm.

Dave: And in June I decided I'm like, you know what? I don't need this anymore. And it would made me like a zombie and it created massive mood swings for me. So one day I woke up and that has has to do with, like, my relationship too. It's like I woke up and I'm like, man, life needs to be better.

It's like so I am completely free of anything, and I'm just, like, feeling tapped into the source for whatever that means.

Steve: Yeah.

Dave: And, a lot of you know, I'm I'm no longer suppressing emotions. Right? I'm no longer hiding behind a a crutch or something like that. And, it all just leads to more happiness,

Steve: you know. Yeah. Do you know what your why is?

Dave: Well, my why has changed, you know, and I've always struggled with this. And, as we get older, you know, my better half has an awesome six year old. I love being a dad, you know, and I love being a role role model to, like, the youth, you know. Mhmm. And, like, something that completely rips my heart to shreds is hearing about anything with, like, child abuse or anything like that.

Like, I'm blessed to have had a great childhood. My parents did their very best. You know, I've pretty much been on my own since I was nine, quite honestly, of just, like, figuring things out, but it was all out of love. You know, we always had food to eat and, you know, I became an uncle when I was nine. So my my 16 year old sister had a baby, and I was forced to grow up quick.

And it is what it is. I had a great childhood, though. I wouldn't change anything. Not every kid has that opportunity, and it just destroys me. Nothing hurts me worse than seeing a child just, basically children are innocent, man.

Dave: Yeah.

Dave: And there's a lot of crap out there. And, so I think my why and I just had this conversation with somebody before I came in here. It's like, man, I would like to give back and create more opportunities for people, younger than me. And if I can be a role model or a mentor to not only the six year old at home, but to any kid and give them a better opportunity, that's a life worth living.

Steve: Obviously, you got the generous genius. Yes. If someone, you know, wants to help support the cause, how could someone do that?

Dave: I'm pretty sure generousgenius.com or just contact me direct on Facebook or anything like that. And, you know, we have raised hundreds of thousands of dollars. And a lot of that goes to Jason Medley. He's, you know, the founder and creator of the Collective Genius Mastermind. He deserves all the credit in the world since day one.

We've been in CG for six years, but from day one, generous genius is his doing. It's not mine. All I did was you know, there was another guy, Matt Andrews. You know, Matt Andrews? You should have him on the podcast, by the way.

Great friend. Morning. Did he? Yeah.

Steve: We were both yeah.

Dave: Phenomenal guy. Him, myself, and RJ and Matt, we've traveled to Haiti numerous times together. We've traveled to Nepal together Mhmm. And doing different things with orphanages. And I was in Guatemala, last year and just traveling the world and doing these great things.

But Matt Andrews was kind of the, the muscle behind Generous Genius indirectly. And then when he, exited, Collective Genius, I just stepped up and said, hey, Jason. Can I help with anything? That's all I do. I it's truly his creation, though.

I'm just grateful to be part of it.

Steve: What is your superpower?

Dave: My superpower is diffusing tense situations, and that comes in the form of business negotiations, and even at home and and personal things, especially with children Mhmm. You know, tantrums and things like that. I can snap someone out of a state and calm them down. You know, the child scrapes their arm and their do you have kids?

Steve: Three.

Dave: What what are the age ranges there?

Steve: Nine, eight, and three.

Dave: So you know a thing or two. Sometimes isn't it funny how a kid could be running and they trip and fall smack on their face? If you act like you didn't even see it, they get right up and keep running. Right?

Steve: That's how they are they were all raised that way.

Dave: They're all that way. And children are so funny. So I've gained the superpower of being able to diffuse situations, but I do that in my business life too. You know? You've been in many negotiations and whatnot.

It's always so tense. Right? We all got our ties up so tight and this

Dave: and that.

Dave: I have the ability to loosen everything and talk about serious things with a smile and just a mellow way of Yeah. Diffusing situations.

Steve: I got my my oldest when she was, you know, learning how to walk. And we're at the mall, and she, like, wiped out at the mall and, like, banged her elbow. Right? And, like, all the moms are, like, freaking out. Of course.

And I'm like, get up. And she just gets up. Yeah. Alright. It's magic so do you think you're being class clown has anything to do with the ability to diffuse situation?

Dave: Well, I will share this with you. The class clown stuff was and this is something that I'm still working on to this day, quite honestly. I told you, I feel that I've pretty much been on my own. I went not on my own, but figuring things out on my own since I was nine.

Steve: Maturing earlier than everyone else.

Dave: Yeah. Because I had to, you know, like, if I wasn't gonna go and make new friends, like, I'd my parents didn't kinda put me force me into anything. Like, hey, maybe we should try them in karate or I would have liked that, but it was just just wasn't even on the table. Mhmm. I just kinda had to find my own way, and I truly believe the class clown energy that I was doing in that personality was because I wanted attention.

Mhmm. I didn't get a lot of attention growing up. Up. I just didn't. I remember just, you know, not getting a lot of attention.

So and even to this day, I do a ton of videos and stuff, and this is what I work on with my Better Half. We all have things we're working on by all means. Right?

Dave: Yeah.

Dave: And sometimes I take it a little too far. You know? Sometimes it's great and it's fun, but sometimes it's almost this external need for validation. It's this external need I gotta, like, be seen. You know?

So that's something I'm working on, but I think that's where that came from. It was just needing that attention and reaching, just always reaching out. Everyone look at me. Look at me. Look at me.

Which led into the ego aspect of the whole real estate stuff. I'm gonna be a jerk to everybody and do this all on my own. So I'm still coming out of it. I'm 38 years old now, and we all got stuff we gotta work on, but I think the first step is just acknowledging it.

Steve: You're still young, 38.

Dave: Thank you, brother.

Steve: One day.

Dave: I'm getting gray, man. You see this coming in now?

Steve: I do see that. Yes. Is there a book you've gifted more than any other?

Dave: A A book that I've gifted Mhmm. More than any other? I would have to say, Traction. I know we're all Traction guys. We all

Steve: do this.

Dave: We're all nerds. Yeah. You know? But I think and know moving forward that's not gonna be the continued book that I give. And I'm really more interested in getting in into more spiritual stuff, quite honestly.

Dave: You

Dave: know? And so I think I to answer your question, traction's the the most gifted book.

Dave: Do

Steve: you know what it's

Dave: gonna be?

Dave: The next book Mhmm. I don't know yet.

Dave: But I

Steve: have a lot of

Dave: good ones on the on the pallet to, to start digesting more and more, and I just wanna continue to work on myself. So Awesome. That book will change. It's not a lot of the mechanics of running a business. That stuff's not as exciting to me as what's possible for the future.

Steve: No. That's not that's that's not what gets you out of bed. Alright. So I'm gonna make a few quick announcements. Think about what you wanna leave listeners with, guys.

If you got value today, please like, subscribe, comment, share. Helps us, helps us all. And don't do it for me. Do it for the algorithm because that's what they want. Then we got, Ryan Roddy Gachalaza coming from Chicago next week to talk about how to scale the construction side of your business.

The guy is, the number one consultant for construction.

Dave: We've worked with him. He's a good guy. Yeah. I vouch for him.

Steve: Yep. So he's gonna be here next week, guys. Check that out. What are your last thoughts?

Dave: My last thoughts are have grace to one another, especially when you're building your business, have grace to your vendors, have grace to your partners. It's you're not perfect. It's okay to make mistakes, and you are forgiven. I've made a lot of mistakes financially, also personally. You know?

And if you give your the most important person to have grace to is yourself. Forgive yourself. We will make mistakes on this journey. There is plenty to go around. I know sometimes it doesn't always feel that way, especially, you know, you're in a competitive real estate market.

Dave: Mhmm.

Dave: But when you are feeling like you are all on your own, try to remember that you're not and you will get bigger if that's what you want. The ultimate goal for all this, Steve, is freedom. I want all of us to be free and personally sovereign. I want you to hold on to more of your money than the US government, either party. Alright.

They're all crooks. Yeah. So we will be stronger together, outside of the establishment. And, forgive yourself, forgive each other, and, you do have a voice. Don't be afraid to use it, especially if you're complimenting, inspiring, or educating someone else.

Steve: Awesome. Beautiful. Again, if someone wants to connect with you, how would they do that?

Dave: So Instagram handle is at the real dave p. And RJ is actually probably better at Instagram than I am. He is at r j pepino, p e p I n o. And our website, which is under construction, is risewiththecream.com.

Steve: Who did I tag this morning on Instagram? It was cream something. Or it was, I don't even know.

Dave: At the real dave p, at r j pepino. That's our personal probably somebody out there. So so good. You're busting chops out there. It's not even us.

Thank you, whoever's out there.

Steve: It wouldn't be the first time.

Dave: Yeah. I know. You're in a you're an Instagram world with somebody that we there's not even even me.

Steve: I don't know. That's good. Yeah. Alright. Thank you.

Yes, sir. Appreciate this was fun.

Dave: Yeah, man.

Steve: Thank you guys for watching. See you all next week.

Speaker 3: Yeah. See, we real estate disrupt us. Can't nobody touch us. And yet we about to give you gains. Shout out to Steve Trane.

Will it say disrupt us? It cannot touch us. And, yeah, we about to give you game. Shout out to to Steve Train Jump on the Steve Train We about to give you game Yeah. See, we real estate disrupt us.